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Protect yourself against data fraud

HM Revenue & Customs admits losing 25 million people’s personal details. What can you do to stop ID fraud?

In one of the most incredible bungles of modern times, HM Revenue & Customs has admitted losing discs containing personal details of 25 million people. The loss raises fears that if the missing data falls into the wrong hands it could lead to ID fraud on a truly heroic scale.

Two discs containing the names and addresses of seven million families and their children were posted by a junior clerk at the Child Benefit office in Washington, Tyne and Wear, to the National Audit Office in London in October. They never reached their destination.

This is almost certainly the worst breach of data security in modern times. The HMRC has confirmed that the missing data contained sort code and bank account details, national insurance numbers, dates of birth, names and address details of all families in receipt of child benefit, as well as the names and dates of birth of those children for whom child benefit is payable.

Despite the scale of the loss, the Government has been keen to reassure us that there is no evidence so far that these discs have fallen into the wrong hands. It said on Thursday it believes the discs are still somewhere in the system and may hopefully be found.

Meanwhile, the general consensus among banks and building societies is that so far this data does not appear to have been used for fraudulent purposes. They say the details lost are not in themselves sufficient for an ID fraudster to access your bank account - additional security information and passwords are always required.

Moreover, if you are the innocent victim of banking fraud as a result of this incident, as a UK customer, you are protected by The Banking Code, which means you should not suffer any financial loss as a consequence.

However, customers should still be extra vigilant in the coming months. So what can you do to prevent fraud? Here are a few simple steps worth taking:

If you use a child's name as a password, change it immediately. You should be able to do this online or by calling your bank. Pick something not linked to the information on the discs - so avoid your child's date of birth, the name of your street or your national insurance number.

Check your bank statement online, and get a mini statement each time you visit an ATM or call your telephone banking service to see if recent transactions have been made. Look for withdrawals you haven't made or movements of cash you can't account for. If you see anything that looks suspicious contact your bank right away.

Keep an eye on your credit file - that way you will see early on if someone has used your details to apply for money in your name. The way you can spot this is if a credit check has been carried out on you for no reason: it means someone else is applying for a credit card, loan, mortgage or mobile phone contract in your name.

A number of credit organisations allow you to check your file on a one-off, including the credit reference agencies Equifax, CallCredit and Experian.

Credit reference agencies also offer a monitoring service, which will alert you if anyone applies for credit in your name. Encouragingly, Equifax is reducing the price of its credit monitoring service by 33% to £3.99 a month. If there are entries on your file that relate to credit for which you have not applied, you should get in touch with the lender or lenders in question and explain what has happened.

What the reports are so far suggesting is that the risk of you being affected by identity theft appears to be slim. However, that doesn’t mean that you can’t take action to safeguard your details.

One final option is to move to a new current account and savings account – therefore receiving new account numbers.

This is something people should look to do periodically anyway – and these events should give you the motivation to look around for the best rates. There is evidence many people are doing so already: here at moneysupermarket.com we have seen more bank account searches than usual in the past few days.

So perhaps this data crisis can be your push to make more from your money and grab yourself a better bank account deal. It’s also a useful reminder that we should always take steps to reduce the risk of identity fraud by shredding receipts and statements; and keeping our PIN secure.

For more advice, the HMRC has set up a Child Benefit helpline: 0845 302 1444.

The message is: don’t panic, but do take care.

DISCLAIMER: Please note that any rates or deals mentioned in this article applied at the time of writing and may no longer be available/applicable today.